Delivering The Goods

While there has been a growing trend to use consultants, Backman believes the freight and transportation companies also offer a much fuller service than they ever did, so it’s worth checking their capabilities in this area as well.

Once you’ve settled on a service provider, Backman says it’s important that, within the contract, both parties agree to KPIs (key performance indicators), which clearly measure performance across the board and these should be assessed regularly on a weekly or monthly basis.

It’s also important that the contract or freight agreement outlines who is responsible for any loss or damage of goods in transit. "Many [service providers] take all care, but no responsibility," warns Backman, "but there’s a growing demand by retailers and other users of transport to push the onus back onto the freight company as part of the terms of the contract. So it’s important to work out what you want and get them to quote accordingly."

Carson agrees but says business owners know their product better than anyone else and would most likely have that product insured for theft or damage in other aspects of the business. "So they may be able to strike a better deal with their insurance company or broker for marine or freight-in-transit insurance."

Mid-year is a good time for businesses to re-negotiate freight arrangements with existing carriers, or look to change if you’ve got service or rate problems, suggests Carson. This is because there’s a natural seasonal downturn in imports, which affects domestic freight movements as well. So when freight volumes are down, carriers are looking for freight and should have more time to help you find cost-saving solutions.

It’s not a matter of screwing your provider, Carson stresses. "It may just be a reason to contact your provider to work out how they can help you save money through perhaps moving the same freight volume but reducing the number of consignments for that amount, or asking how to better package your product and reduce risk of damage." It’s really about requiring the service provider do so some consulting back to your business, in order for the business to retain its margin and reduce overall freight costs.

Other tips to getting more bang for your freight buck include ensuring items are packed properly and securely, and are clearly marked. This will help reduce loss and damage, but Totorici says it can also help reduce freight costs. "When you’re moving things, in the freight industry you actually get charged on the basis of the weight or the size (whichever is the greater), so we’ll cut down boxes and make them to size where possible because we know it’ll save you on freight."

And the use of barcoding and radio frequency technology will assist even further with product identification.

Businesses sending light freight will also be affected by the kilo versus cubic rate scenario, advises Carson, so beware of this when getting quotes from potential service providers, and when you’re packing items.

And if you’re moving large amounts of freight interstate, it could also pay to have not just a kilo rate but a separate pallet rate, so you’ll have an incentive to build a pallet, which will end up costing less per carton than paying for individual cartons.

Overall, business owners or managers need to reassess their freight and logistics practices at least annually, says Backman, to determine whether you’re still getting value for money and if there are new players in the market with a more appealing offer.